Date of Approval: July 7, 2004 Date of Publication: July 8, 2004

Indocement to implement Clean Development Mechanism (CDM) initiatives

Changes in the Earth's climate is the most obvious effects of increasing greenhouse gases.

If that really happens, as scientists have predicted, then rising global temperatures would cause floods, long periods of drought, the demise of biodiversity, imbalanced ecosystems and various diseases, such as respiratory problems and malaria in developing countries. Thus, climate change poses a threat to long-term development.

Carbon dioxide (CO2), from burning coal, oil and natural gas, all of which are fossil fuels, has frequently been cited as the major cause of greenhouse gases.

There is growing concern about emissions caused by industrial activities, especially those using fossil fuels. Cement is produced by burning a mixture of raw materials comprising mainly of limestone and clay in large rotary kilns at temperatures above 1450 degrees Celsius. This process results in the formation of clinker, which together with gypsum and other materials, is transformed into cement after grinding. The CO2 emissions from cement manufacturers originate mainly from the burning process and the de-carbonation of the limestone.

Globally, cement production accounts for about 3 percent to 4 percent of total greenhouse gas emissions.

A study by the World Business Council for Sustainable Development entitled, Toward a Sustainable Cement Industry, sponsored by 10 leading cement producers including Germany's HeidelbergCement Group, majority shareholder of PT Indocement Tuggal Prakarsa (Indocement), explains how the cement industry can develop in a sustainable way with a focus on economic growth, a balanced ecosystem and social development as its three main pillars.

Due to the substantial CO2 emissions from the cement industry, particular attention is given to reduce such emissions through the use of other sources of energy and by using less clinker in cement.

Aware of the importance of protecting global climate, Indocement is currently engaged in implementing a project within Clean Development Mechanism (CDM) of the Kyoto Protocol Initiatives as part of its continuous efforts to ensure sustainable development.

Indocement's commitment to global climate protection was demonstrated when the company and the World Bank signed an agreement for the first cement sector project for reducing greenhouse gas emissions. The Emissions Reduction Purchase Agreement was signed in Cologne, Germany on June 9, 2004 in connection with the first Carbo Expo, a trade fair event for the global carbon market.

Under the agreement, Indocement will receive funds from the Prototype Carbon Fund (PCF), a World Bank administered fund representing six governments and 17 companies.

For Indocement, to remain competitive in the future, business objectives of the cement industry must take into account the sustainable development goal, namely to "meet the need of the present without compromising the ability of future generations to meet their own needs". Hence, Indocement continues to give significant effort to minimizing the environmental impact of its production and maximizes the impact on development while supporting local community development.

In operation for almost 30 years, the company's three plants -- Citeureup, about 45 kilometers south of Jakarta, Cirebon, about 300 km east of Jakarta and Tarjun in South Kalimantan -- apply well-established environmental management and monitoring practices. A set of institutional, management and monitoring measures are in place to ensure full compliance with applicable Indonesian legislation and standards. Wherever practical and feasible, Indocement aims to avoid adverse environmental and social impacts of its operations. Where such impacts are inevitable, Indocement is committed to reducing them to acceptable levels.

The main impact upon air quality in the cement industry is dust and gaseous emissions such as carbon dioxide. Indocement has installed Electronic Precipitators that meet stringent Indonesian and international standards.

With regard to Indocement's, Sustainable Cement Production Project, under the Clean Development Mechanism of the Kyoto Protocol, Indocement plans to reduce greenhouse gas emissions by introducing alternative fuels and producing new types of cement.

Following the principles of the Kyoto Protocol -- the 1997 international agreement to limit the emissions that cause climate-altering greenhouse gases - the CDM allows industrialized countries and companies with greenhouse gas reduction commitments to purchase some of their required reductions in developing countries.

As part of the Sustainable Cement Production Project, Indocement will produce a composite cement that will displace more emission-intensive Ordinary Portland Cement (OPC) by introducing high quality limestone as well as natural pozzolan (trass) and fly-ash from coal powered stations. Furthermore, the company will introduce alternative fuels (biomas), such as rice husks, coconut shells and sawdust instead of coal in the burning process in the company's three locations, Citeureup, Cirebon and Tarjun.

According to Indocement's Technical Director Olivind Hoidalan, Indocement's CDM undertaking, which will be the first project of its kind by a cement company in Indonesia, will begin in 2005 and is foreseen to continue for more than 10 years.

"The total greenhouse gas emission reduction is estimated at around 10 million over a period of 10 years," he said.

The Kyoto Protocol inked in Japan in 1997 is the driving force. The protocol commits industrialized countries to reduce their carbon emissions by an average of 5 percent below 1990 levels in the period from 2008 to 2012.

Under the Kyoto Protocol, countries and companies can supplement their international and national reduction targets by purchasing lower-cost emission reductions in developing countries by sponsoring emission-reduction projects. As a result, projects in developing countries will get a new source of funding for sustainable development in the energy, industrial and waste management sectors, land rehabilitation and clean technologies. Industrialized countries can meet part of their Kyoto obligation, while the threat of climate change is reduced at lower overall cost.

For Indocement, an awareness of global climate protection for sustainable development is insufficient. This awareness should be followed by tangible steps. Through the CDM initiatives, Indocement translates awareness into concrete actions.